With the failure of the Punjab and Maharashtra Co-operative (PMC) Bank reigniting the debate on the low level of insurance for deposits held by customers in banks in India, the central government now plans to raise the cover.
About:
Currently, in the event of a bank going bust in India, a depositor has claim to a maximum of Rs 1 lakh per account as insurance cover — even if the deposit in their account far exceeds Rs 1 lakh. Depositors holding more than Rs 1 lakh in their account have no legal remedy in case of the collapse of the bank.
This amount is termed ‘deposit insurance’. The cover of Rs 1 lakh per depositor is provided by the Deposit Insurance and Credit Guarantee Corporation (DICGC).
DICGC last revised the deposit insurance cover to Rs 1 lakh on May 1, 1993 — raising it from Rs 30,000, which had been the cover from 1980 onward.
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